Shares of upstream oil companies, mainly Oil and Natural Gas Corporation (ONGC) and Oil India, rose 4% on the BSE in intraday trade on Thursday after the government slashed the windfall tax on domestically produced crude oil from Rs 5,050 tons to Rs 4,350 per ton. Additional excise duty on Aviation Turbine Fuel (ATF) has also been reduced to Rs 1.5 per litre from Rs 6 per litre previously.

The centre imposes a windfall tax on profits earned by oil producers above $75 per barrel.

Shares of ONGC rose 4% to Rs 153.25 on heavy volume following the news. A total of 8.1 million shares changed hands over the counter in the first 40 minutes of trading.

Shares of Oil India rose 3% to Rs 256 on the BSE. The S&P BSE Sensex gained 0.64% to 61,665.

Meanwhile, Motilal Oswal Financial Services (MOFSL) analysts reiterated their “buy” rating on ONGC amid strong realization and increased visibility of production growth.